Health Insurance: All you can eat vs pay-as-you-go

I agree with Arnold that people are irrational when it comes to thinking about healthcare, and that part of this irrationality expresses itself as a preference for insulation coverage over catastrophic coverage. I’ve certainly felt the urge, to pick the healthcare plan that covers the most stuff when having to make that decision.

I don’t think this is any less rational than preferring all you can eat Internet over paying for bytes transferred. People don’t want decision making transaction costs interfering with import decisions.

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3 Responses to Health Insurance: All you can eat vs pay-as-you-go

Alex, finally got to your blog. Then explain why the rest of the world is all paying by the minute with cell phones and the USA is still doing this complex pricing system … the result of this may help explain why everyone else in the world uses SMS, but how did it all start?

My guess a lot of the reason for differences between US and foreign mobile phone markets is that most of thier landline carriers are government/monopolies that charge such high prices that mobile phone and SMS is not as comparatively expensive as it used to be here.

This is also the reason why they use SMS and we use IM. IM requires a persistent net connection and that is much more expensive there.